Iran Regime Change, Greenland Takeover, Open AI vs Anthropic, Money in Politics

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0:50Michael Novogratz:This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, Sponsored Jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a$75 Sponsored Job Credit at Indeed.com slash podcast. Terms and conditions apply. This is your fix. I am your host, Stassi Schroeder. Welcome to Tell Me Lies, the official podcast. What's the most unhinged thing of season three?

1:29Michael Novogratz:Steven, because he's so evil. I do think he is misunderstood. You see everyone face consequences. It's intoxicating. The writers just know how to trick you. There's always a twist in this show. Tell Me Lies, the official podcast, January 6th, and stream the new season of Tell Me Lies, January 13th on Hulu and Hulu on Disney+. Since Citizens United, this was a court case that allow for unlimited money to go into issues or potential candidacies, lobbying has become way more powerful. And these congressional leaders more or less do the bidding of the lobbyists. They usually get their way if there's a lot of force put on them.

2:04Michael Novogratz:Do I have that wrong? It is. It's sad and bad for our country and bad for democracy that money talks as much as it does. And period in the story. You just see it in every part of our political system today. And so, yeah, and the banks have a lot of it. Welcome to All Things Markets. I am Anthony Scaramucci. And I'm Mike Novogratz. All right. So, Mike Novogratz, last time we spoke, you were on your way to D.C. The Senate Banking Committee has postponed its vote on the crypto market structure legislation. There's been some industry pushback. Why don't you take us up to speed on what you learned in Washington?

2:44Michael Novogratz:And I know you're still an optimist that the bill gets passed, so let's start there. Yeah, so let's start with the good news. The good news is on the Democratic side, from the minority leader Schumer all the way down, there is a commitment to get this done. People actually want to get this done. And they want to do it for two reasons. A, they think it's important for America to lead in digital assets. But maybe more importantly, B, they realized it was really bad politics to be anti-crypto. And so they want to be seen as being pro-crypto. And they want to get this off the table going into the midterms in the 28 elections, right?

3:27Pass this bill and there's no real legislation left in the crypto space. And so I think there is good faith and I think they've been negotiating in good faith. and I think the Republican side, same thing, the little frustration of how long this is taking. And then what I would tell you is it's a really complicated set of issues. Like if me and you were writing the bill, guys who are pretty good at crypto, we'd have a hard time figuring out every issue. And now you match that with the fact that our industry isn't an industry, it's a group of people fragmented people with their own ideas. And whoever spends the most lobbying seems to have the strongest voice.

4:20Brian Armstrong, there's 21 lobbyists on his team in DC. They have been all over the hill for a long period of time and deserve a lot of credit for getting a lot of this stuff hashed out. They've been loud and vocal about interest on stablecoins. I think we're going to lose that battle as an industry. It's a shame. It just tells you how strong the bank lobby is. And there'll be a compromise. The compromise is the stablecoin companies will be able to give some reward points out for usage, but not balances.

4:58Michael Novogratz:And you think people like the Coinbase team will accept something like that, Michael? I don't want to speak for Brian or Coinbase. My gut feeling is when you look at the bill in whole, it is so good for the industry to move on. You'll do that and then you'll come back and try to fight that in round two a couple of years later. Yeah, I mean, I think that the enemy of progress is to search for perfection, as you and I both know as entrepreneurs. You've got to get things going and then tweak them as you go. But let's go to this issue because we've got a lot of young viewers. fractional banking is such that I make a deposit and then the bank uses my money in lots of different ways including loaning it to potential mortgages or commercial real estate or it could be a business loan to somebody and they take a spread they pay me interest and they charge interest on the loan and there's a spread there because the way fractional banking works is a little bit of a multiplier effect to those deposits.

5:57Michael Novogratz:That's not true in the stablecoin industry. Is that correct? Let's be careful. So yes, you're right. So if I was the Fed share and I thought I'm going to have deposit flight and it's all going to go to stablecoins and there's no credit creation mechanism on the other side, I'd be scared. What's interesting is the blockchain world, the crypto world is quickly coming up with credit solutions. We've tokenized the CLO recently. You've got Mike Cagney's got a whole company that's tokenizing mortgages. There is a big and growing DeFi credit business that we're participating in, Galaxy all the time, and that's kind of when I see the growth industry.

6:48So I think in time, in three, four, five years, you're going to be able to keep stable coins in your wallet. You're going to be able to actually lend out money to small businesses, to large businesses, to mortgages in tokenized form. And so I do think that transition will happen. And it was interesting, a few senators were really excited when we were explaining some of what was happening in DeFi credit. So that's one thing that you will have credit creation. The second thing is, listen they're already so they're worried about deposits like why because jp morgan wells bargo city bank on your savings account pay you nothing they pay you less than 10 basis points and so your desire to hold money in savings most of it's laziness you want to keep your money somewhere safe you're not really paying attention uh there are places i mean galaxy FDIC1 will take your money if FDIC insured 4%.

7:51SoFi does. And there's a ton of neobanks where people can move their money and they have it. So this idea that we're going to see this crazy amount of deposit inflating to stablecoins from U.S. customers is a smokescreen. The banks are using, the big banks, are using the small regional community banks as their weapon. It's like, oh, you're going to ruin the community banks. I'd say the same thing. if people wanted to take their money out of community banks and put it into a neo bank, they already would have. Like these are your least sophisticated investors. Over time, yes, an interest bearing stable coin is a better instrument for the consumer than having your money in a bank that might or might not be insured by the government.

8:34Right. I know my stable coin is fully backed by the treasury bill. Right. So it's not a loose idea that maybe they're going to bail out Silicon Valley. And so it's ironic that the Democrats and the Republicans are kind of fighting on behalf of the banks on this issue, as opposed to the consumer.

8:57Michael Novogratz:And some of that... I mean, I'm going to make a statement and either agree or disagree. Since Citizens United, this was a court case that allowed for unlimited money to go into issues or potential candidacies, lobbying has become way more powerful. And these congressional leaders more or less do the bidding of the lobbyists. And they usually get their way if there's a lot of force put on them. Do I have that wrong? It is. It's sad and bad for our country and bad for democracy that money talks as much as it does. And period in the story. You just see it in every part of our political system today.

9:39And so, yeah, and the banks have a lot of it.

9:42Michael Novogratz:So, but there's got to be, you know, this has got to be a filibuster-proof vote, Mike. So we're talking about 60 votes. You think in the Senate there's 60 votes? So there's a group of moderate Democrats that have been really the team, right? The 12 of them that have been pushing this thing forward. And they're holding hands. they're like we're not gonna we're all gonna go or not gonna go and i think who knows if that's the case when it comes to the vote but there are enough that will go that will get this built on i feel pretty strongly about that now listen that's you know that's not the only issue one of the the issues which i think they have solved is the ethics issue right should the president or the vice president be able to launch a stable launch their own stable coin or launch their own meme coin or launch their own L1 blockchain while they're in office, should their children.

10:35And I think that's a really emotional issue right now. Guys like Adam Schiff, that's been his big issue. And it's a lot of, this is just realpolitik. Think of it, you're a centrist Democratic senator, a moderate, but you know you've got a wing on the left, led by Elizabeth Warren and co who's saying what the hell is happening in America between ICE and accounts in Qatar and taking back Greenland it feels like chaos and doing anything to appease the president feels counterintuitive to them and therefore that's going to be and I think listen Ruben Gallego is on the democratic side negotiating that with Cynthia Lummis I think they're going to get there to something that's fair language where they both can live with uh but it's funny there's seven parts of this bill and each of them have to kind of get tweaked what i told all the senators both sides that i was meeting with i think i met with 12 senators one-on-one uh over two days and had a lot of calls is i'm positive if i took the bill as is and the bill that we want you know in four years time and gave you both, you wouldn't remember which one you voted on.

11:52And it won't matter as much for the industry as we think, because we're such a young industry. We don't know exactly what's going to happen. We don't know where stable. My real bias is 75 % of stable coin growth is going to all happen overseas. Right. And so I would love new issue or a stable is going to be able to compete. Right now, Taylor has a monopoly almost because they were a good product. They were first to market. They have product market fit and they're making all the spread. So you're letting the foreign company take all the spread off your stable coin, a United States stable coin. That's so counterintuitive to me.

12:34I can't like see straight.

12:36Michael Novogratz:Yeah, it just seems odd that we would get to a conclusion like that. But even with that conclusion, your prediction is we're going to get this deal done. Is that a first quarter deal? Is it the end of February deal? I think we'll go a lot more in two weeks. Yeah. This has to happen in the next month or so where it will get done. And so there's a tremendous amount of to and fro going back on the wires every day. But like I said, there's a commitment almost, at least an emotional one, on both sides to get this done. let's go back to an earlier conversation that you and i were having related to the fed uh the greatest reality television producer in the world is a guy named donald j trump he also happens to be the 47th president and so he set up the apprentice and he's got people thinking one way and he just shifted it another way uh he's now going yeah i mean he's got everybody listening You know, I mean, he had Kevin Hassett as the favorite.

13:40Michael Novogratz:He's gotten knocked down in the Cal C poly markets now. He said he would like him to stay. He's raised up Rick Reeder, a mutual friend of yours and mine, Kevin Warsh. I think you know him better than I do, but I've met Kevin a few times. So what happens now in the Federal Reserve chairman's sweepstakes? You know, it's a great question. Listen, if you're a betting man now, Warsh feels like he's the insider. Um, right. We know he's close with Besson. Uh, they were both mentored by Stan Druckenmiller, quite frankly, Warsh's office. It's in Druckenmiller. You know, he, he works for Druckenmiller. Uh, and for the viewers that don't know Stan Druckenmiller, he's kind of God when it comes to macroeconomics.

14:24He's, he literally is the most respected or one of the most.

14:27Michael Novogratz:But also 10 years ago, he was out there going to colleges. This is Stan Druckenmiller with the help of Kevin Warren she was going out there saying hey there's a generational theft going on it's called the borrowing too much money kicks back yeah the idea was can you actually show young people how bad they're being screwed and have them become a political voice and unfortunately young the answer that was no Michael no they didn't get they didn't care people come and go when it you know it's like you need a lightning bolt that like Mondami got the lightning bolt and got them all engaged right now.

15:02Obama had done it briefly, but you know, when you're in your twenties, you care about finding your mate, you know, your boyfriend, your girlfriend, your future white, you find about getting your job, starting to build your grub stake of money. So you have shit to do. Like politics is not where you spend your time. When you're my age and your age, you go home, you say hi to your wife, you go on to, you turn on the news or you pick up the paper, you go on to Twitter or X and you just drive yourself crazy with politics. but when you're 26 you're like excuse where are we going tonight right right where are we going

15:34Michael Novogratz:tonight and can you believe they took that much out of my paycheck i was a liberal but i'm now thinking of voting a republican but but but what does that mean though is is you know because you know we talked about this last week he's uh criminally investigating jerome powell um i think that's sending a message to people worse worse in the short run uh would be seen as a more conservative pick who has a ton of integrity. When you meet Kevin, he... I see Kevin as a monitorist, though. Mike, let me just stipulate this. I've heard him speak. I've read his papers. He's a hard-dollar sort of a person.

16:13Michael Novogratz:I don't see him as a guy that's going to jam rates down to zero. Has he changed his rhetoric? Let's assume, again, me and you are the two central bank heads, and we have to take a serum that makes us apolitical. we are literally just going to do what we can we're going to try to predict where inflation is going where growth is going and how do we hit the dual mandated of that like we're we're the ai version of the perfect fed governor it's a really really hard debate on where inflation's going because you've got ai which could be the greatest productivity builder in the history of the universe and i think kevin worse believes inflation's going lower and Fed funds are too high.

16:57So I think in this period, his monetary view could align with what Trump wants, even if it's not for the same reason.

17:07Michael Novogratz:Okay. So, but listen, you could be in a situation where Kevin's position from his principles and his philosophical belief about how the Fed should operate could differ from President Trump. And then what, Mike? One thing we learned from Scott Bessett, and because I would have said the same things about Scott as I said about Worsh going in, is when you're working for Trump, you learn really quickly he's the boss. And you don't take that job unless you're willing to bend some of your credibility, some of your reputation being that job. It's a deal with the devil. It just is. And I think Rick Reader and Warsh are probably, probably have already made that deal.

17:56You can justify, you can say, well, wait a minute, the Fed has independence. So once I get in there, I can stand up-ish. But I don't think you take that job unless you're, and listen, we've seen this. You know, Scott Besson has become eight times more political than I ever thought he'd become. And he's good at it from that respect. I mean, I don't love what he, everything he says and stands for.

18:18Michael Novogratz:Yeah, listen, I mean, you got to play the fiddle. I couldn't play it. I got fired after 11 days. Elon Musk figured out he lasted 11.8 Scaramucci's. We like Elon in this program, so we round up to 12 Scaramucci's. But, you know, at the end of the day, you're not towing that line perfectly, you know, and you're playing to an audience of one. So it'll be interesting how that plays out. So we got two more topics to talk about. I want to go to Iran and I want to go to Greenland contemporaneously because I think they're somewhat similar. You know, I almost tweeted something on Iran this morning. I got the New York Post right here.

18:55I read it every day. And it's like the kill switch and it's showing the pictures. And it's, you know, Iran's threatening to start killing all these people again. And he says, if Trump comes in, it'll be a catastrophic war. And I was like, so I was in Iran in 2011. I took the U.S. wrestling team there. and you know i don't you visit a place you get friends there you meet it you really start feeling more vested in it and i have hated the theocracy a lot since i mean i hated it beforehand but i've really hated it since then and you know these guys are shitheads pure and simple and they are they are do whatever they can to stay in power they have a religious zealotry so they think whatever they do is justified uh they're anti-woman they're anti-progress uh and their people are suffering this revolution is not happening because guys like me want it to happen or even that donald trump hate time ran uh it's happening because the group of people in charge of that country the stewards of that country have blown it they have hyperinflation their Currency has worked toilet paper at this point, right?

20:08If you're a merchant, you spent your whole life and you get hyperinflation. Now you're like, what am I? What am I saving? I can't send my kids to school. And remember, the broad Iranian middle class and business class are smart, commercial, well-educated. And they're like, what the hell? Are countries going to hell in a hand pass? And so the revolution happened because of the Kurds. Let's make no bones about it. and when we talk about bitcoin and gold when stewards of their country's currency do a shit job this is what happens sometimes it happens it takes longer than you think it's going to happen but i was going to tweet i was like the decision to intervene or not intervene is such a hard decision as a as the president as a political body like it's a domestic thing It's happening locally, but you've got a group that doesn't have guns.

21:03You saw all these beautiful women and young men killed or maimed because they're out there fighting with their fists and their hearts. And, you know, the other guys are using trucking lethal weapons.

21:17And, you know, especially at a time when we're taking what looks like a militarized police force in ICE and having that same debate in Minneapolis. you know the poor lady with the whistle who gets shot in the face who was protesting uh you can look at that as a tiny microcosm of what's happening in iran and say well like you know i don't know it it makes it even more confusing i still deep down hope trump does something and i don't know what i would do if i was president before it's a hard decision so i give him and that whole administration the benefit of the doubt and it is a hard decision i deep down I hope we do something because I really dislike those.

21:59Michael Novogratz:I want to ask the question in the following way. I want you to think about it this way. Iran and Greenland are similar to me because of compromise. And so if the regime would be willing to compromise and set up the forces of economic reform and entrepreneurship and a move towards modernity, they might be able to survive. Look at what the Saudis have done. You can drive a car in Saudi Arabia. I know Western women. let's let's be very very clear uh mbs was a 34 year old 33 year old ascendant prince right who had a radically different idea what saudi could be he is a unbelievable revolutionary and this is going to sound like crass if it wasn't for the khashoggi incident which is a big incident that guy would be getting the nobel peace prize right now for what he's doing There is nothing in the DNA of Hamani or any of the people around him that thinks like that.

22:58Right. So the idea that we're going to let this administration pivot a teeny bit is just fantasy thinking.

23:07Michael Novogratz:Okay, so they're not going to compromise. What about President Trump? Will he compromise on Greenland? uh greenland is such a bizarrely weird and idiotic idea i mean you know i think tom tillis said it best he was like let's just stop talking stupid i don't think the u.s senate and the u.s the republican u.s senate and the republican u.s house will go along with green it's so anti what we stand for as americans and i think jd vance has blown his career to shreds between his response to Minneapolis and this whole Greenland thing. Trump can get away with shit like that. No one else can. And so I would literally take any bet that J.D.

23:52Vance doesn't become...

23:52Michael Novogratz:And if you notice, Rubio's trying to stay out of the picture. No talk shows, no nothing, right? Because he knows it's too deep. It's a losing issue. And you've turned Canada and Europe against us. Even if Trump's just negotiating, we played our hand too far. We don't need Greenland. We've got bases in Greenland. This is... You know, listen, you can diagnose any politician and you can diagnose Trump with some sense of grandiosity or narcissistic personality or what do you want to say? I mean, I just asked for someone else's Nobel Prize. This behavior is accelerating. But he took it, though, Mike.

24:30Michael Novogratz:He took it. Not only did he ask for it, but he took it. He could have said, hey, thanks for offering it, but, you know, I'm not going to take it. But he took it. But because he's on a roll in his mind, and to be fair, he's on a roll. He's done some really interesting and great things for the country, as well as he's done some things that have really, I think, damaged our country, maybe for a long period of time. But you've got to give him credit for the wins he has. He's got an economy that's still pretty strong, the stock market at the high, not in goal terms, I would argue, but in general and notional terms.

25:03And so he feels good and he feels like, I mean, he said it on in that New York Times interview. The only limit to my own power is my own morale. I thought he said mortality. He actually said morality. It's really scary.